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This Liberal Billionaire Just Bought a Whole Bunch of Coal Company Stocks

George Soros has pledged to invest $1 billion in renewables, but he recently purchased a million and a half shares in the two largest US coal companies.

by Matt Smith
Aug 21 2015, 8:05pm

Photo by Andreas Gebert/EPA

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Beset by a boom in natural gas and a rising interest in clean energy, King Coal is losing his grip on his throne.

One of the industry's biggest players has gone bust. Other heavyweights have seen their stock prices plunge into the single digits.

And now liberal billionaire George Soros, a major green power booster, is buying into the dirtiest fossil fuel in a big way.

A Securities and Exchange Commission filing at the end of July showed Soros Fund Management recently bought more than 1 million shares of Peabody Energy, the largest US coal producer. His company also bought more than 500,000 share of Arch Coal, the industry's No. 2 player.

At late-July prices of about $1.20 a share for Peabody and less than $1.90 for Arch, the buys were pocket change for Soros — like stopping off for a few lottery tickets on the way home from work. The Hungarian-born financier and conservative bogeyman has a personal fortune that Forbes estimates at more than $24 billion.

But since Soros pledged to invest $1 billion in renewables in 2009, and has been a vocal supporter of action to head off the threat of carbon-driven climate change, his new interest in the struggling coal sector has raised some eyebrows.

"The markets and public opinion have made it crystal clear that investing in coal is a bad bet, as the smart money is going to the booming clean energy economy," Bruce Nilles, the senior campaign director for the Sierra Club's Beyond Coal Campaign, said in a statement e-mailed to VICE News.

Related: The US coal Industry Is Shuttering Mines and Its Market Value Is Plummeting, Says a New Study

Steve Piper, an industry analyst at SNL Energy, said Soros might be making a two-pronged play: If the industry recovers, he makes money; if it doesn't, he can use his holdings to press the companies to make changes.

"He could agitate for more investment in carbon capture and sequestration, more involvement in producers beneficiating coal from an environmental perspective, or pursuing technology such as gas to liquids or coal to liquids, which might have higher value in the long term and potentially a better environmental footprint," Piper told VICE News.

The shares Soros bought up aren't commanding. They amount to about 2.5 percent of Arch and less than 1 percent of Peabody. But as one of the most prominent figures in business, he "punches above his weight," Piper said.

If coal continues to struggle, Soros could push them to close less-profitable mines and producing less coal from more efficient sources.

"You could argue there is an environmental benefit there," he said. Of course, closing down mines means fewer jobs in place like West Virginia or eastern Kentucky.

"It's not without consequence, obviously," Piper said. "But coal companies are trying very hard to do exactly that. They've been cutting back for the past three years in an effort to get ahead of this declining market, There's probably more in store."

Related: This Material Can Remove Carbon Pollution From the Atmosphere

American coal production dropped under a billion tons in 2013, the lowest number in 20 years, according to the US Energy Information Administration. Cheap, abundant natural gas, which has roughly half the carbon emissions, has cut sharply into its share of the power-plant market. The Obama administration's latest rules for reducing CO2 are likely to reduce that even more. And another of the industry's heavyweights, Alpha Natural Resources, filed for bankruptcy at the beginning of August.

Companies hope the rising economies of Asia and Africa will provide a market for the black rock. But they've made little headway against Indonesian and Australian producers — and in the developing world, solar energy is becoming cheaper and competing neck-and-neck with coal for new capacity, Bloomberg's New Energy Finance group reported in June.

If the industry does bounce back, its biggest players — like Peabody and Arch are poised to reap much of the gains, Piper said. Those firms own the largest mines in the American West — including in Wyoming's vast Powder River Basin, where the coal is lower in sulfur and mercury than in the Appalachians. Peabody also has holdings in Australia, giving it more of an international profile, Piper said.

But Piper conceded, "At the end of the day, I can only speculate about what the Soros firm might be thinking about."

What the VICE News documentary Toxic Waste in the US: Coal Ash here:

Follow Matt Smith on Twitter: @mattsmithatl

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